TUCSON, Ariz., Sept. 30 The Providence ServiceCorporation (Nasdaq: PRSC) today announced that subsidiaries of the Companyhave acquired substantially all of the assets in Indiana and Illinois ofCamelot Community Care, Inc., a Florida not-for-profit tax exempt corporation.The transaction has a purchase price of $5.4 million and eliminatesapproximately $5.0 million of management fee receivables to Providencesubsidiaries from the Company's balance sheet.
Providence will consolidate the revenue associated with this acquisition,estimated at approximately $11.1 million annually and will no longer recognizemanagement fees related to these operations. The transaction is expected tobe neutral to earnings. Providence is very familiar with these operationshaving provided management services for them since 2002.
Traditionally, in Indiana and Illinois, the operations of CamelotCommunity Care, Inc. could only be performed by not-for-profit tax exemptorganizations. However, as privatization has expanded over the last severalyears, the requirement that social services be provided by not-for-profit taxexempt organizations has diminished. Consequently, certain states likeIndiana and Illinois now allow these social services to be provided byfor-profit entities.
Camelot Community Care, Inc. will continue its not-for-profit operationsin Ohio, Florida and Texas. In conjunction with the acquisition, Providencehas also consolidated its subsidiaries' separate management agreements withCamelot Community Care into one administrative service agreement, with oneexception. The administrative services Providence will provide includespecified infrastructure services such as human resources, IT, accounting andpayroll.
Providence Service Corporation, through its owned and managed entities,provides home and community based social services and non-emergencytransportation services management to government sponsored clients underprograms such as welfare, juvenile justice, Medicaid and corrections.Providence does not own or operate beds, treatment facilities, hospitals orgroup homes, preferring to provide services in the client's own home or othercommunity setting. The Company provides a range of services through itsdirect and managed entities to nearly 78,000 clients through nearly 950contracts at June 30, 2008, with an estimated six million individuals eligibleto receive the Company's non-emergency transportation services related to itsLogistiCare operations. Combined, the Company has a nearly $1 billion book ofbusiness including managed entities.
Certain statements herein, such as any statements about Providence'sconfidence or strategies or its expectations about revenues, results ofoperations, profitability, earnings per share, contracts, collections, awardof contracts, acquisitions and related growth, growth resulting frominitiatives in certain states, effective tax rate or market opportunities,constitute "forward-looking statements" within the meaning of the privateSecurities Litigation Reform Act of 1995. Such forward-looking statementsinvolve a number of known and unknown risks, uncertainties and other factorswhich may cause Providence's actual results or achievements to be materiallydifferent from those expressed or implied by such forward-looking statements.These factors include, but are not limited to, reliance on government-fundedcontracts, risks associated with government contracting, risks involved inmanaging government business, legislative or policy changes, challengesresulting from growth or acquisitions, adverse media and legal, economic andother risks detailed in Providence's filings with the Securities and ExchangeCommission, including its Form 10-K for the year ended December 31, 2007.Words such as "believe," "demonstrate," "expect," "estimate," "anticipate,""should" and "likely" and similar expressions identify forward-lookingstatements. Readers are cautioned not to place undue reliance on thoseforward-looking statements, which speak only as of the date the statement wasmade. Providence undertakes no obligation to update any forward-lookingstatement contained herein.5524 E. Fourth Street -- Tucson, Arizona 85711 -- Tel 520/747-6600 -- Fax 520/747-6605 -- http://www.provcorp.com
SOURCE The Providence Service Corporation